MUMBAI, January 22: Hindustan Lever Ltd (HLL) has picked up a minority stake in Tasty Bite Eatables Ltd, a loss-making food-processing company located in Pune. The deal came through with the acquisition of a 49 per cent stake in Grand Food & Catering Consultants Pvt Ltd, which holds 51 per cent in Tasty Bite Eatables.According to analysts, the step may have been taken by Hindustan Lever to establish a base in the processed foods industry which is expected to open up in the coming years.
This would save the company the task of making huge investments in fresh assets for setting up its own facilities. In the past too, HLL has invested in loss-making facilities (the Rajpura soap manufacturing factory for instance), and turned them around into profitable assets.
"Unless the market (processes foods) is really developed, there is no point setting up large capacities. It makes sense for HLL to acquire existing facilities and grow more through acquisitions, rather than grow organically," said Birla Marlin
Securities research head K Ramachandran.
Tasty Bite Eatables, with accumulated losses of Rs 9.26 crore in 1996-97, was referred to the Board for Industrial and Financial Reconstruction (BIFR) for rehabilitation in 1994. The company is promoted by Ravi Ghai and has a capacity to manufacture 10,000 tpa of frozen vegetables, marketed under the `Tasty Bite' brand name.
With the foods sector emerging as one of HLL's core activities, the company is likely to be interested in more such investments in existing processed foods facilities, industry sources pointed out.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
